The concept of chit has been in practice in an unofficial manner for hundreds of years now. This concept obtained an official version many decades back. Even today, chits happen in an indirect manner initiated through individuals who form a group and collect certain amounts of money in a periodical manner. The money collected is pooled and dispersed to all the members as loan.
Chit Funds which basically started as a savings scheme evolved more as a loan product for deserving participants from time to time. It not only motivated people to save money but also offered a helping hand to them whenever they required money to face financial commitments. Chit Funds schemes that are conducted properly as per the Chit Funds Act created in 1982 work in a more professional manner offering security to participants than unofficially run private chits.
Chit Funds are considered as Micro finance organizations and are governed by the different State and Central Laws. Chit Funds are considered as safe means for savings as well as loans. People who invest in Chit Funds gain on a month on month basis in the form of loans as well as in the form of waivers.
Chit Funds are of many types based on the functionality of the same. Some such chit funds types that are prevalent are :-
- Organized Chit Funds
- Special Purpose Funds
- Online Chit Funds
Chit Fund has been a simple procedure that offers high levels of security to investors than any other forms of investments. This is due to the regular interactions that happen between the people who invest and the Chit Fund managers who manage the fund pool. In today's scenario, Chit Fund is the best option for people to choose from among the various other savings and investment choices available for them.